While tipping in India is certainly not compulsory, doing so is a nice gesture and can ensure that you receive better service in the future.
Tipping in India is typically referred to as 'baksheesh' and is generally just a small token of your appreciation for good service. It is best to separate your money; carry a few small bills in a pocket so that you can give baksheesh quickly without digging through your money in view of everyone.
When giving a tip in India, do so subtly and quietly without making a big production of it.
Someone asking you on the street for 'baksheesh' without providing a service is simply begging.
Read about giving money to beggars in India.
General Guidelines for Tipping in India
- Large eateries may add a service charge or gratuity of around 10% to your final bill; your waiter may or may not actually receive that money. If you really want to make sure someone receives your tip for excellent service, give it to them directly or leave some small change on the table. A tip of 5 to 10% in restaurants is considered excellent.
- Anyone who carries your bags will expect a tip of at least 20 rupees per bag. Do not allow someone to grab your bags for you if you do not wish to pay them.
- Tipping guides and drivers in India is customary if they do a good job. A tip of around 200 rupees per day is an excellent tip.
- Tip your drivers and boatmen if they got you where you wanted to go quickly without too much of a hair-raising ride. It is also customary to round up a fare or allow them to keep the change when paying.
- Anyone providing a direct service to you such as spa staff and barbers will appreciate a small tip at the end of their service.
Tipping in India is an art and doesn't follow rigid guidelines, but you'll catch on quick enough. Some situations may even call for you to tip in advance so that you receive faster or better service later -- use your judgment -- and make sure that your proactive tipping is not misconstrued as a bribe!
Whatever you do, smile, and try to never cause a losing face incident during your interactions.